Strengths:
Well-established globally- brand name
Trusted product
Aggressive advertising
Limited liability for shareholders
Large financial reserves
A range of products at different stages of the product life cycle
Maintain close relationships with suppliers.
Biggest pharmaceutical company.
R+D a priority
Effective family branding
High quality
Socially responsible
Weaknesses:
History of animal testing
R+D takes a long time, expensive
Hierarchal structure ignores cultural diversity
Some unsuccessful products
Expensive products
Patent nearly expiring
Absenteeism in Australia
High risk of takeover
Opportunities
Growing market
Possible merger with Anigam
Possible joint venture with R-Taylor
Increase in demand for anti aging drugs/ products
Diversification, vet market booming.
Opportunity to repair reputation
Loyal customers in Europe
Increase demand for their products on global market
Rapid economic development and increase in product life expectancy
Number of diseases without cure
Threats
Repercussions of adverse side effects
Volatile financial markets
High commercial costs in Europe
Animal rights activists generating conflict
Competitors are selling cheaper substitute products
Uncertain political situation in China
Low patent enforcement
Poor quality control in China
Pest
Political:
Current legislation in Europe is extremely strict
Patent legislation in China is not strict nor is quality control
Historic disagreements between China and Japan.
Economic:
Economic boom in Japan
Volatile economic situation
Recession in Europe would make buying companies cheaper
Global interest rates will increase from 2010 onwards
Japan has lowest GDP growth in comparison to the world. China (highest) and Europe.
Social:
Increased awareness in Japan of animal testing
Aging population in Japan => increased healthcare needs
Increase in world population
Increase in pandemic disease.
Technology:
Improvements in manufacturing technology
Breakthroughs in biotechnology
Teacher's comment: a comprehensive list - but be careful NEVER to list in the exam. chosse a small number of points and explain them thoroughly.
Define the terms shareholder and Private limited company
A shareholder (a.k.a. Stockholder) are the people who own shares in a private or public limited company. These are are the part-owners of a company and are therefore entitled to a share of its profits.
A Private Limited Company ('Ltd.') is a business organization owned by shareholders with limited liability but whose shares cannot be bought / sold to the general public. Instead, shares are sold to private family members and friends. Identify two advantages and two disadvantages of N-Pharma merging with Anigam
One advantage of N-Pharma merging with Anigam is that N-Pharama can benefit from economies of scale, reducing cost per unit and increasing combined profit. Another advantage is that a merger reduces the competition between companies in the pharmaceutical industry and they will hold a larger market share.
One disadvantage is that scientist are known to work better in smaller teams when working on R & D. In larger groups conflict could occur and productivity could decrease which could lead to bigger conflicts between the companies. Another disadvantage is that some redundancies may need to be made, which would make some workers unhappy and could damage the reputations of companies.
Identify and explain two advantages and two disadvantages of being a Public Ltd company
One advantage is that a public Ltd can benefit from economies of scale, able to work on a large scale allowing average costs of production to decrease while output increases. Another advantage is that the company is able to take out larger loans and receive better terms (interest rates) as banks see them as having enough financial support to be able to pay back loans with the time.
One disadvantage of being a public limited company is that all past records of the company can be viewed by the public and possible shareholders determining if they will buy shares and invest in a company. Another disadvantage people can buy shares in the company which dilutes the control of the owners weakening their ability to control the company.
Teacher's comment: The last point here depends on how the share ownership is structured. Control is only diluted when new shares are issued. If the current shareholders of N-Pharma were to mainained more than 50% ownership of the shares, they would still have control over the company.
Explain the term stakeholder and identify four stakeholder groups of N-Pharma. Identify and explain possible conflicts that could arise between them.
Stakeholder - person, group or entity that can affect or be affected by a business' activity
Discuss the possible benefits of N-Pharma entering into a joint venture with other pharmaceutical companies.
If N-Pharma was to enter into a joint venture with another pharmaceutical company there would be many advantages. N-Pharma could benefit from a 50:50 split in financial costs, spreading risks and losses between the two ventures. It can also help N-Pharma diversify its products such as perhaps products into the veterinary market. A joint venture can also help with entry into foreign markets so N-Pharma could benefit from local overseas markets. In terms of external growth a joint venture is relatively cheap, involving less legal procedures than takeover and is easier to pull out of. Competition with other pharmaceutical companies is reduced and their pooled resources, expertise and technology give them together a high competive edge over other pharmaceutical companies as well as a high market share. There is a high rate of success with joint ventures as they are generally friendly and mutual benefits involved encouraging the joint venture companies to work together.
Evaluate an alternative organisational structure that could be adopted by N-Pharma.
Discuss the benefits and possible problems of N-Pharma being a multinational company
Being a multinational company allows N-Pharma to gain benefits from economies of scale such as buying the raw materials in bulk, able to recruit expensive but quality staff for research and development which is important for N-Pharma and can do wider marketing activities to promote the brand as the costs will be spread out. However, one of the most significant barriers in being a multinational company is language and culture as it might be difficult to communicate and work together with all the staff and maximize the efficiency of the company. Another problem that N-Pharma might face is legislation since this will effects the easiness in expanding and opening overseas.
Use the Ansoff Matrix to evaluate N-Pharma’s past and current growth strategies
Evaluate the 3 growth options being considered by N-Pharma
Evaluate the extent to which N-Pharma is a socially responsible company.
SWOT:
Strengths:
Well-established globally- brand name
Trusted product
Aggressive advertising
Limited liability for shareholders
Large financial reserves
A range of products at different stages of the product life cycle
Maintain close relationships with suppliers.
Biggest pharmaceutical company.
R+D a priority
Effective family branding
High quality
Socially responsible
Weaknesses:
History of animal testing
R+D takes a long time, expensive
Hierarchal structure ignores cultural diversity
Some unsuccessful products
Expensive products
Patent nearly expiring
Absenteeism in Australia
High risk of takeover
Opportunities
Growing market
Possible merger with Anigam
Possible joint venture with R-Taylor
Increase in demand for anti aging drugs/ products
Diversification, vet market booming.
Opportunity to repair reputation
Loyal customers in Europe
Increase demand for their products on global market
Rapid economic development and increase in product life expectancy
Number of diseases without cure
Threats
Repercussions of adverse side effects
Volatile financial markets
High commercial costs in Europe
Animal rights activists generating conflict
Competitors are selling cheaper substitute products
Uncertain political situation in China
Low patent enforcement
Poor quality control in China
Pest
Political:
Current legislation in Europe is extremely strict
Patent legislation in China is not strict nor is quality control
Historic disagreements between China and Japan.
Economic:
Economic boom in Japan
Volatile economic situation
Recession in Europe would make buying companies cheaper
Global interest rates will increase from 2010 onwards
Japan has lowest GDP growth in comparison to the world. China (highest) and Europe.
Social:
Increased awareness in Japan of animal testing
Aging population in Japan => increased healthcare needs
Increase in world population
Increase in pandemic disease.
Technology:
Improvements in manufacturing technology
Breakthroughs in biotechnology
Teacher's comment: a comprehensive list - but be careful NEVER to list in the exam. chosse a small number of points and explain them thoroughly.
Define the terms shareholder and Private limited company
A shareholder (a.k.a. Stockholder) are the people who own shares in a private or public limited company. These are are the part-owners of a company and are therefore entitled to a share of its profits.
A Private Limited Company ('Ltd.') is a business organization owned by shareholders with limited liability but whose shares cannot be bought / sold to the general public. Instead, shares are sold to private family members and friends.
Identify two advantages and two disadvantages of N-Pharma merging with Anigam
One advantage of N-Pharma merging with Anigam is that N-Pharama can benefit from economies of scale, reducing cost per unit and increasing combined profit. Another advantage is that a merger reduces the competition between companies in the pharmaceutical industry and they will hold a larger market share.
One disadvantage is that scientist are known to work better in smaller teams when working on R & D. In larger groups conflict could occur and productivity could decrease which could lead to bigger conflicts between the companies. Another disadvantage is that some redundancies may need to be made, which would make some workers unhappy and could damage the reputations of companies.
Identify and explain two advantages and two disadvantages of being a Public Ltd company
One advantage is that a public Ltd can benefit from economies of scale, able to work on a large scale allowing average costs of production to decrease while output increases. Another advantage is that the company is able to take out larger loans and receive better terms (interest rates) as banks see them as having enough financial support to be able to pay back loans with the time.One disadvantage of being a public limited company is that all past records of the company can be viewed by the public and possible shareholders determining if they will buy shares and invest in a company. Another disadvantage people can buy shares in the company which dilutes the control of the owners weakening their ability to control the company.
Teacher's comment: The last point here depends on how the share ownership is structured. Control is only diluted when new shares are issued. If the current shareholders of N-Pharma were to mainained more than 50% ownership of the shares, they would still have control over the company.
Explain the term stakeholder and identify four stakeholder groups of N-Pharma. Identify and explain possible conflicts that could arise between them.
Stakeholder - person, group or entity that can affect or be affected by a business' activity
Discuss the possible benefits of N-Pharma entering into a joint venture with other pharmaceutical companies.
If N-Pharma was to enter into a joint venture with another pharmaceutical company there would be many advantages. N-Pharma could benefit from a 50:50 split in financial costs, spreading risks and losses between the two ventures. It can also help N-Pharma diversify its products such as perhaps products into the veterinary market. A joint venture can also help with entry into foreign markets so N-Pharma could benefit from local overseas markets. In terms of external growth a joint venture is relatively cheap, involving less legal procedures than takeover and is easier to pull out of. Competition with other pharmaceutical companies is reduced and their pooled resources, expertise and technology give them together a high competive edge over other pharmaceutical companies as well as a high market share. There is a high rate of success with joint ventures as they are generally friendly and mutual benefits involved encouraging the joint venture companies to work together.
Evaluate an alternative organisational structure that could be adopted by N-Pharma.
Discuss the benefits and possible problems of N-Pharma being a multinational company
Being a multinational company allows N-Pharma to gain benefits from economies of scale such as buying the raw materials in bulk, able to recruit expensive but quality staff for research and development which is important for N-Pharma and can do wider marketing activities to promote the brand as the costs will be spread out. However, one of the most significant barriers in being a multinational company is language and culture as it might be difficult to communicate and work together with all the staff and maximize the efficiency of the company. Another problem that N-Pharma might face is legislation since this will effects the easiness in expanding and opening overseas.
Use the Ansoff Matrix to evaluate N-Pharma’s past and current growth strategies
Evaluate the 3 growth options being considered by N-Pharma
Evaluate the extent to which N-Pharma is a socially responsible company.